Are you a salaried individual who pays house rent but does not receive any HRA benefits from your employer? If yes, then you may be eligible for tax benefits under Section 80GG of the Income Tax Act, 1961. It allows taxpayers to claim a deduction for rent paid even if they do not receive HRA.
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Section 80GG is a provision under the Income Tax Act that allows a taxpayer or an assessee to claim a deduction for the rent paid towards his/her accommodation. The deduction can be claimed by all individuals – salaried or self-employed, including those without any income. The provision helps individuals reduce their overall tax liability.
Any assessee who pays rent for his/her accommodation but does not receive any HRA from his/her employer can claim a deduction under Section 80GG. However, the following conditions must be fulfilled:
The assessee should not own any residential property at the place of his/her employment or business.
The individual, their spouse or minor child should not own any residential property at any other place.
The individual must not claim HRA deduction under other IT sections.
The amount of deduction claimed under Section 80GG is subject to the following conditions:
The maximum deduction that can be claimed is Rs. 2,000 per month or 25% of the total income, whichever is less.
The rent paid should be in excess of 10% of the total income.
The term “total income” refers to the income earned by the assessee from all sources, including salary, business, and other sources.
One of the main advantages of Section 80GG is that it provides a tax deduction for individuals who do not receive HRA but pay rent for their accommodation. It is particularly beneficial for people with low income or who are at the start of their careers. It further helps reduce tax liability and save more.
Both salaried and self-employed individuals can claim a tax rebate, including those who do not earn.
One of the main disadvantages of Section 80GG is that the maximum deduction that can be claimed is limited to Rs. 2,000 per month or 25% of the total income, whichever is less. The tax benefit provided by this section may be relatively small for individuals with higher incomes or those who pay high rent.
Another disadvantage of Section 80GG is that the rent paid must be in excess of 10% of the total income. It means that individuals paying a low rent or with a high income may not be eligible for this tax deduction.
It is important to note that individuals claiming a deduction under Section 80GG cannot receive tax rebate under other sections for the same rent paid.
To claim a deduction under Section 80GG, the individual must file Form 10BA along with the income tax return.
The following information is mandatory to fill in the form:
House rent amount
Complete address of landlord and assessee
Rent receipts/proof of rent paid
Basic information of assessee and landlord – name and contact information
Keep other documents like rental agreement and govt-issued ID cards handy if required while filing the claim. In addition, always ensure that the rent paid is not reimbursed by the employer.
Section 80GG is a beneficial provision for individuals who do not receive HRA benefits. Individuals can also consult a finance professional to claim deductions and increase savings. However, it is important to meet all conditions under this section to receive the necessary tax rebate.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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